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Retired and on COBRA

If you continue your health insurance through COBRA after you leave your job, you still need to sign up for Medicare Part A and Part B if you’re 65 or older. Otherwise, you could end up with late enrollment penalties and coverage gaps.

Medicare works differently with COBRA, depending on whether you first signed up for COBRA before or after age 65.

What happens if my COBRA coverage began before I turned 65?

Your COBRA benefits cease at age 65 no matter how many months of COBRA coverage you were eligible for. You’ll need to sign up for Medicare during your initial enrollment period, which begins three months before the month you turn 65 and ends three months after your birthday month. Additionally, you will not be informed by Medicare that you need to sign up because your COBRA coverage ceased.

How does Medicare work with COBRA after age 65?

You aren’t prohibited from signing up for COBRA when you leave your job after turning 65, but you could end up with late enrollment penalties and coverage gaps if you don’t sign up for Medicare at that time.


You can only delay signing up for Medicare if you or your spouse is still employed and you have health insurance from a current employer. Even though COBRA is the same coverage as you had when working, it acts differently under Medicare rules because you or your spouse are no longer actively working in that job. The bottom line here is that even if you have coverage through COBRA, you MUST sign up for Medicare when you're no longer receiving employer coverage in order to avoid significant penalties on your monthly premiums. 

Primary vs. secondary coverage

COBRA switches from being the first in line to pay your medical bills to being secondary coverage when you turn 65 whether you're on Medicare or not. This could leave you without primary coverage if you don't sign up for Medicare at that time. 

When you’re on Medicare, it pays your health care claims first, and your other coverage — whether COBRA, a Medigap policy, or retiree coverage — pays for expenses and services that Medicare doesn’t cover. The secondary coverage may pay for Medicare’s deductibles, copayments, and other out-of-pocket costs.

However, if you don’t sign up for Medicare, the secondary coverage may not pay any claims. It’s important to sign up for Medicare before — or soon after — the employment ends so that you don’t end up with coverage gaps.

Prescription drug coverage

The rules are different for Medicare Part D prescription plans. Medicare considers COBRA to be “creditable coverage,” which means you don’t have to enroll in Part D as long as you have that coverage, even if it is not from a current employer.

After losing that coverage, you’ll have 62 days to enroll in Part D without a late-enrollment penalty.

Medigap plans

You can buy any Medigap policy in your area, regardless of your health, within six months of enrolling in Medicare Part B. Otherwise, Medigap insurers can reject you for coverage or charge more if you have preexisting conditions. Within 63 days of losing health insurance that provides secondary coverage to Medicare, such as COBRA, you have another guaranteed issue right (a.k.a. Medigap protection).

However, in most states, you must exhaust COBRA coverage (meaning that you may have to pay for the full 18 months of COBRA) before you’re given this guaranteed issue right, if more than six months have passed since you signed up for Medicare Part B. When first deciding whether to supplement Medicare with COBRA or Medigap, compare the cost of both options and keep this time frame in mind.

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